Illinois law shows that a wage garnishment being used to collect a consumer debt is an action against the consumer’s employer, not against the consumer, according to the U.S. Court of Appeals for the Seventh Circuit. As a result, garnishment proceedings are not subject to the Fair Debt Collection Practices Act restrictions on where debt collectors can sue consumers (Jackson v. Blitt & Gaines, P.C.).
Other than in foreclosure suits, the FDCPA requires debt collectors to bring legal actions “against any consumer” in the judicial district where either the contract was signed or the consumer lives (15 U.S.C. §1692i). In the two consolidated suits, the debt collecting law firm Blitt & Gaines took default judgments against the consumers in the correct Cook County, Illinois, municipal district, but later filed garnishment actions in a different district. The consumers sued, claiming the FDCPA required the garnishment proceedings also to have been filed in the municipal district where they lived.
Who’s the target? To the court, the significant factor was the focus of a garnishment proceeding, and the focus was on a consumer’s employer. The court pointed out that:
- The summons was to be served on the employer, while the consumer was entitled only to notice by mail.
- The garnishment interrogatories were to be served on, and answered under oath by, the employer.
- Although the consumer could file an objection, the garnishment would proceed based on the employer’s actions—“the judgment debtor is not a necessary participant,” the court noted.
- The employer could be liable for the amount of the judgment if it did not comply with the process, while there were no penalties imposed on the consumer.
- Illinois law set garnishment proceeding venue in the county of the employer’s location, not of the consumer’s residence.
FDCPA purposes. The FDCPA’s venue rule was intended to prevent a debt collector from denying a consumer the opportunity to defend against a collection suit by filing the suit in an inconvenient forum, the court said. Even the Federal Trade Commission, in an FDCPA interpretation, said that a judgment could be enforced in a different jurisdiction as long as the consumer had the chance to defend against the suit where it was filed.
“The FDCPA was created to prevent abusive debt-collection practices, not to prevent law-abiding creditors from collecting on legally enforceable debts,” the court concluded.
For more information about fair debt collections, subscribe to the Banking and Finance Law Daily.
